Lender-Placed Insurance Coverage

Lender-placed (or Force-placed) insurance is coverage that a mortgage
lender or bank purchases for property it owns to protect its interests when
the homeowner fails to purchase this coverage. This often occurs during
situations of abandonment and foreclosure. The premium cost for this
insurance is usually higher than conventional homeowners’ premium, and this
cost may ultimately be borne by the homeowner.

The high premium costs and the fact that homeowners are often “forced” to
pay for this coverage by the lender (mortgage lender/bank) has increased the
attention for this type of insurance. Fannie Mae and Freddie Mac guarantee a
large portion of the mortgage market nationally and in Florida, and are in
the process of revising their rules to require admitted carriers (not
surplus lines carriers) to insure this business.